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Abstract

This paper investigates theoretical micro-foundations of core competencies in the organization that pursues sustainable competitive advantage. It advocates that there is a lack of literature perspectives which can explain the sources of core competencies of the firm. This research raises questions on: What are the main sources of creation and sustenance of core competencies? What are the abilities which nourish the development of operational and dynamic capabilities? What is the main source of collective knowledge in the organization? This work answers these questions by proposing a dynamic ability-based view of the organization which contributes to explaining the dynamic behavior of the firm in the pursuit of sustainable competitive advantage. Cognition is the core ability which supports individuals, groups, and organizations with intelligence, autonomy, learning, and knowledge management. These concepts form the set of organizational abilities in this research.

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Organizational Abilities

Ability is a general term concerning the capacity to act mentally, physically, financially, legally, or in some other ways. Cognitive ability refers specifically to mental capacity (Ree, Carretta, & Steindl, 2002). In the context of this paper, cognitive ability is the main source of intelligence, autonomy, learning and knowledge management in the organization. Therefore, organizational abilities involve concepts of cognition, intelligence, autonomy, learning and knowledge management.